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Indirectly - Obama and The NYTimes admit Social Security is a Ponzi Fraud

In general, the art of government consists in taking as much money as possible from one part of the citizens to give to the other. —Voltaire (1764)

Indirectly - Obama and The NYTimes admit Social Security is a Ponzi Fraud

Through intended “leaks,” President Obama will propose a change in calculating the cost-of-living increases for Social Security, which will result in beneficiaries receiving less money than the current system. The President's faithful supporters are horrified that the President would take money from retirees. Union leaders, Moveon.com, and the Senate's only socialist – Bernie Sanders – are adamantly opposed. Why would the President “tweak” Social Security, and irritate his political base and gigantic voting block – seniors?

The President knows – as should every member of the Senate and House – that Social Security and Medicare are spending more money than the Social Security and Medicare tax revenues bring in. These two programs and Medicaid (health care for the poor) are sucking gigantic sums of money out of the Federal treasury and will continue to consume more and more. So, the President is seeking a trade with Republicans – a small tweak to Social Security in exchange for a lot of tax increases.

It's a terrible trade; especially for young Americans. If Congress and the President make a “deal,” Social Security, Medicare and Medicaid will continue to expand – especially Medicaid under ObamaCare - and taxes will be greatly increased. Paul Krugman recently reported that in order to maintain these programs, a Value Added Tax (VAT) must be imposed. A VAT is a form of sales tax, which will tax everyone in addition to our current taxes. [Read: America Beware of More Stealth Tax Increases]

Most revealing - indirectly, President Obama is admitting that Social Security and Medicare are Ponzi frauds. As The New York Times recently stated “... Social Security has always been a pay-as-you-go system, with workers’ taxes going not to some actual trust fund for them but directly toward benefits for retirees.”

Jackie Calmes, of The New York Times, laments that the public – especially seniors – mistakenly believe they have paid for their Social Security and Medicare benefits. In an article titled Misperceptions of Benefits Make Trimming Them Harder, she reports that for the last six years Medicare has sucked over 45% of its payment from the Federal treasury. So, besides paying the 15.3% Social Security and Medicaid tax, every taxpayer is also paying for the short-fall in Social Security and Medicare benefit payments. YIKES!

Needless- to-say, America has a debilitating and perilous debt problem. The President and Calmes acknowledge – indirectly – that Social Security and Medicare must be substantially changed.

This is important. For major political change to occur, Americans must understand the problem. The problem with Social Security and Medicare is that “workers’ taxes going not to some actual trust fund for them but directly toward benefits for retirees.”

Worse, Social Security and Medicare are sucking gigantic sums from the Federal treasury and will continue to consume more and more. These indirect admissions are a rebuke of Pelosi's claims eight years ago that Social Security was solvent until 2042, and should stop politicians from claiming Social Security and Medicare are not part of America's deficit and debt debacle.

When Americans understand the debt problem, then serious discussions on resolutions will ensue.

It's actually a scheme that the rest of the economy relies on to maintain a middle class lifestyle.

This is probably why most will never understand "the debt problem," as an economy that uses the reserve currency will have no choice but to maintain economic "growth" by constant borrowing and spending.

The Congressional Budget Office (CBO) released a report last month projecting an increase in the federal budget deficit relative to the gross domestic product (GDP) for the first time since 2009. The deficit for this year is now expected to be $590 billion. As a percentage of GDP, that is 3.2% compared to last year’s 2.5%. It is not good news when the deficit is growing faster than the economy, which is currently growing at 1.4%.

Puerto Rico is in a financial free-fall, and the federal government is actively trying to prevent a total economic meltdown. Recently, legislation was introduced in the House by the Natural Resources Committee to help resolve Puerto Rico’s financial crisis, an effort that is well-intentioned and far superior to any taxpayer bailout of the territory. There are concerns, however, that still need to be addressed before the bill should go forward.

Recently, the public debt crisis in Puerto Rico has sparked widespread discussion about the need for public pension reform. The island territory is already $72 billion in debt, with shortfalls in the public pension fund of up to $30 billion. Without major changes in government spending patterns, Puerto Rico is in danger of becoming insolvent, sending the already brittle economy into a death spiral. While many on the left call for the immediate restructuring of Puerto Rico’s debt, the island’s plight is just the latest example of a state or territory misusing and abusing their public pension system, demonstrating the dire need for reform.

Social Security funds are set to dry up by the year 2034. In an election cycle with a focus on foreign affairs, national security, and the economy and jobs, Social Security reform has largely remained off the radar. As a millennial paying into this program fully knowing I will never receive its benefits if the system continues its course, I decided to dig a little deeper into the candidates’ positions on this topic.

The Congressional Budget Office (CBO) has released its updated budget projections, and there's no sugar-coating the numbers. The federal government’s annual budget deficits were already slated to start rising again in 2016, but thanks to some discouraging economic growth predictions and a bloated budget deal that added tens of billions in new spending, we’re now looking at returning to trillion dollar annual deficits in only six years (2022).

Today marks the 50th Anniversary of Medicare and Medicaid, which were signed into law on July 30, 1965 by President Lyndon Johnson. These programs, along with Social Security, are collectively referred to as entitlement programs and are taking up a growing proportion of the annual budget. This problem is overshadowed by an even larger danger for Medicare and Social Security: their trust funds are about to dry up.

Recently, the Congressional Budget Office released their Long-Term Budget Outlook for 2015. The official CBO Outlook included some pretty scary figures. The forecast projects the deficit as a percentage of GDP to increase from below 3 percent, to nearly 6 percent in the next twenty-five years. Over the same time frame, the CBO forecasts national debt to increase to over 100 percent of GDP.

In the last decade we have had a housing crisis, a banking crisis and a car manufacturing crisis. If student loan debt does not catch up with us first, the next economic crisis is likely to be state and municipality pension debt.

A number of congressional Democrats have signed a letter to President Barack Obama urging him to consider expansion of Social Security, the 80-year-old program designed to provide retirement benefits to Americans. The letter was sent on Monday for the White House Conference on Aging, a once-in-a-decade meeting where at attendees analyze and discuss various policy proposals for seniors and make recommendations.